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Computing storage producer Seagate has agreed to pay a $300 million penalty imposed by the US Division of Commerce (DOC) for transport over $1.1 billion price of laborious disk drives to Huawei, violating export management restrictions. An investigation by Commerce’s Bureau of Trade and Safety (BIS) decided that Seagate shipped 7.4 million laborious drives to Huawei between August 2020 and September 2021 with out acquiring an export license, regardless of a rule launched in August 2020 that restricts gross sales to the Chinese language firm.

The $300 million penalty is the most important effective ever imposed by the BIS that isn’t tied to a legal case. The BIS says it’s greater than double Seagate’s earnings in promoting the laborious drives.

Seagate turned Huawei’s sole laborious drive provider after it claimed US commerce restrictions didn’t apply to its HDDs

Huawei was first positioned on the Entity Checklist, a US commerce blacklist, in Could 2019 amid issues the corporate’s communications know-how might assist the Chinese language authorities spy on American networks. These restraints have been expanded in August 2020 when BIS imposed a license requirement on sure foreign-produced gadgets made with US know-how being offered to Huawei. Seagate claimed its laborious drives weren’t topic to the restrictions (in line with Reuters), and continued to do enterprise with Huawei, changing into the corporate’s sole supplier of HDDs.

“Even after Huawei was positioned on the Entity Checklist for conduct inimical to our nationwide safety, and its opponents had stopped promoting to them attributable to our international direct product rule, Seagate continued sending laborious disk drives to Huawei,” stated Matthew Axelrod, Assistant Secretary for Export Enforcement.

Underneath the phrases of the settlement, Seagate pays the $300 million effective in quarterly installments of $15 million over 5 years, ranging from October 31, 2023. The corporate additionally agreed to a multi-year audit and a five-year suspended “denial order,” which might activate and forestall Seagate from exporting merchandise if it fails to pay any installments or full its audit necessities.

“We consider coming into this settlement with BIS and resolving this matter is in the most effective curiosity of Seagate, our prospects and our shareholders,” stated Seagate CEO Dave Mosley in a press release. “Whereas we believed we complied with all related export management legal guidelines on the time we made the laborious disk drive gross sales at subject, we decided that participating with BIS and settling this matter was the most effective plan of action.”

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